Dreamhost is one of the most popular hosting providers in the U.S and they are now moving to the cloud. While the cloud represents the path forward, Simon Anderson, CEO of Dreamhost understands that the cloud isn't for everyone.

In an exclusive interview with InternetNews, Anderson explained why his firm has chosen to embrace the open source OpenStack cloud platform and how it all relates to the existing business of web hosting.

Anderson said that Dreamhost was starting to get a lot of requests from customers to launch cloud services similar to Amazon. Dreamhost decided to go with OpenStack and began contributing code to the open source effort 18 months ago.

In comparison to co-location, virtual private server and shared hosting, the new DreamCompute cloud services are a bit different. Cloud offers distributed scale out storage as well as truly virtualized infrastructure.

"It's also a big difference in the way the end user chooses to consume the services," Anderson said. "We don't see shared hosting or virtual private server (VPS) hosting going away, we see it continuing strong into the future."

Shared and virtual private servers have traditionally offered standardized pricing that is not highly variable. In contrast, the cloud offers the ability to have elastic scalable buckets of compute and storage.

In the short term, Anderson doesn't expect to migrate existing VPS and share hosting infrastructure to a cloud-based system like OpenStack. Looking out three to five years, it's a different story. Inside of the next five years, Dreamhost could well be hosting its shared hosting customers on top of an OpenStack infrastructure. That's another reason why Dreamhost is investing in OpenStack, so the company can be an expert on the open source cloud system.

In terms of trying to convince users that the cloud is the right choice, Anderson stressed that Dreamhost isn't a company that tries hard to upsell customers on new services and products.

The plan is to explain the value of the cloud to the customers that have the use cases that make sense for the cloud. Those include start-ups that need to have their applications rapidly scale and grow with demand. From a pricing perspective, the goal is to have a model that doesn't expose users to extreme variability in monthly costs.

With multiple companies now entering the market for OpenStack services, differentiation isn't going to be easy. Anderson expects to be able to differentiate against his competition through the technology and the fact that Dreamhost includes flexible APIs that exposes the power of the platform.

It's a model that is similar to what Dreamhost does today for shared hosting. Anderson said that Dreamhost shared hosting customers today get shell access, which isn't common across other shared hosting providers. On the cloud side, Anderson aims to innovate on storage and networking.

"We're doing to put the power in the hands of the web developer to very simply architect their applications, secure it all and then run it and do it in a very automated fashion," Anderson said.

The other way Anderson is aiming to differentiate the Dreamhost cloud is by being a great resource on how the cloud can be used.

The Future of OpenStack

"OpenStack now is a reliable comprehensive cloud platform with all of the elements that you need to be able to run a private cloud or a public cloud," Anderson said.

The challenge over the next year will be about moving enterprises from proof of concept and development and moving into production implementations. As OpenStack becomes more widely adopted, it opens up the possibility for federated clouds where workloads can be moved geographically. "To me the next year is all about adoption," Anderson said.

Watch the full interview below:

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals Follow him on Twitter @TechJournalist.

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